Penny Stocks – Do You Risk It or Walk Away?

Hey, remember back in college when someone told us about that “can’t-miss” penny stock? The one trading for, like, 7 cents a share? You didn’t bite. I did. Let’s just say… it didn’t pay for my beer money, let alone my future.

Penny stocks have that strange hold on people. They’re cheap. They’re full of promise. And sometimes, yeah—they do explode. But for every one of those, there are dozens that disappear without a trace.

So let’s have the honest conversation no one ever had with us when we were starting out.

What Are Penny Stocks, Really?

Penny stocks are shares of small companies that usually trade for under $5. Sometimes they’re startups. Other times, they’re once-respectable companies that fell on hard times.

They tend to trade on over-the-counter (OTC) markets or smaller exchanges. And most importantly—they’re high-risk, high-uncertainty plays.

These aren’t blue-chip stocks. They’re more like “maybe-chips.”

Why Do People Love Them So Much?

Simple: the upside feels massive.

I mean, imagine buying 1,000 shares for $100. If the stock doubles? That’s $100 turned into $200. If it goes to a dollar? You’re suddenly sitting on ten times your money.

It’s the appeal of finding “the next big thing” before the world notices.

And let’s be real—there’s a thrill to it. But it’s also where a lot of people get burned.

What’s the Catch?

Here’s what most folks don’t tell you until after your money’s gone:

No liquidity: You might not find buyers when you want out.

Sketchy financials: Many of these companies don’t even file full SEC reports.

Pump-and-dump central: It’s a breeding ground for hype-driven scams.

Huge volatility: A 30% swing in a day isn’t unusual—and it’s not always good news.

It’s a playground, sure. But it’s one with a lot of broken swings and hidden potholes.

So Can You Actually Pick Good Ones?

Yeah, but you have to go in with your eyes open and your brain turned on. That means ignoring the YouTube hype videos and focusing on the data.

This is where I’ve started leaning on Investorean’s Penny Stock Screener. It doesn’t show you every cheap stock out there—it shows you the ones that actually have something going for them.

You can sort by:

Companies with real revenue growth

Stocks with rising volume and momentum

Businesses that look like they’re turning a corner, not circling the drain

It’s not a magic wand—but it filters out a lot of junk and helps you focus on real possibilities.

How I’d Play It If I Were You

If you’re curious about penny stocks—and I know you are—here’s how I’d do it:

Only use money you’re okay losing. Think of it as going to Vegas… but with homework.

Keep it small. Maybe 5% of your portfolio, max.

Diversify even within that. Don’t put all your penny stock cash on one pick.

Use a tool like Investorean to help you make smarter, data-driven decisions.

Be patient. These stocks move fast, but real growth takes time.

Final Word, Just Between Us

Penny stocks aren’t all bad. They’re just misunderstood. Most people either go in blind and lose big—or avoid them completely and miss out on real chances.

But if you walk in knowing the risks, armed with the right info, and grounded in strategy, you might just find a few diamonds in the dust.

Just don’t forget: it’s investing, not wishing. Use your head. Tools like Investorean make that a whole lot easier.

And if you do end up finding a winner—don’t forget who talked you into thinking it through first.